Midland States Bancorp, Inc. · NASDAQ:MSBI
Midland States Bancorp — Q2 2023 Earnings Presentation
32 slides from Midland States Bancorp's earnings presentation, Jul 27, 2023
Slide 1: Midland States Bancorp, Inc. Second Quarter 2023 Earnings Presentation
1 Midland States Bancorp, Inc. NASDAQ: MSBI Second Quarter 2023 Earnings Presentation
Slide 2: Forward-Looking Statements
22 Forward-Looking Statements. This presentation may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements expressing management’s current expectations, forecasts of future events or long-term goals may be based upon beliefs, expectations an
Slide 3: Company Snapshot
33 Company Snapshot • Illinois state-chartered community bank founded in 1881 • $8.0 billion in assets • $3.6 Wealth Management business • Commercial bank focused on in-market relationships with national diversification in equipment finance • 53 branches in Illinois and Missouri • 16 successful acqu
Slide 4: Business and Corporate Strategy
4 Business and Corporate Strategy 4 Customer-Centric Culture Drive organic growth by focusing on customer service and accountability to our clients and colleagues; seek to develop bankers who create dynamic relationships; pursue continual investment in people; maintain a core set of institutional va
Slide 5: Successful Execution of Strategic Plan...
5 Successful Execution of Strategic Plan... 5 Total Assets (at period-end in billions) $1.1 $1.6 $1.5 $1.6 $1.7 $2.7 $2.9 $3.2 $4.4 $5.6 $6.1 $6.9 $7.4 $7.9 $8.0 Selected Acquisitions 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2Q 2023 CAG R si nce 201 6 IP O: 1 5% CAGR: 16
Slide 6: ...Leads to Creation of Shareholder Value
6 ...Leads to Creation of Shareholder Value 6 Tangible Book Value Per Share(1) 22 Consecutive Years of Dividend Increases $17.31 $17.00 $18.64 $19.31 $21.66 $20.94 $22.24 $17.22 $17.09 $18.34 $18.80 $21.42 $24.72 $26.11 Tangible Book Value Per Share TBV/Share ex. AOCI 2017 2018 2019 2020 2021 2022 2
Slide 7: ...And Increased Profitability
7 ...And Increased Profitability 7 Adjusted Diluted EPS(1) CAGR: 14.9% Adjusted ROATCE(1) 11.32% 15.00% 14.44% 9.24% 18.33% 18.59% 16.60% 2017 2018 2019 2020 2021 2022 YTD 2023 Notes: (1) Represents a non-GAAP financial measure. See “Non-GAAP Reconciliation” in the appendix. $1.89 $2.39 $2.54 $1.70
Slide 8: Overview of 2Q23
8 Overview of 2Q23 Strong Financial Performance Stable Deposit Base Continued Shift of Portfolio Towards Commercial Loans Increase in TBV and Capital Ratios 8 • Net income available to common shareholders of $19.3 million, or $0.86 diluted EPS • Pre-tax, pre-provision earnings(1) increased 8% from p
Slide 9: Loan Portfolio
9 Loan Portfolio 9 • Total loans increased $13.1 million from prior quarter to $6.37 billion • Growth primarily driven by increases in commercial loans and leases and construction and land development loans, partially offset by decline in consumer loans resulting from planned reduction of loans orig
Slide 10: Total Deposits
10 Total Deposits 10 • Total deposits increased $1.3 million from end of prior quarter • Noninterest-bearing deposits decline primarily attributable to commercial depositors moving excess liquidity into interest-bearing accounts and other seasonal outflows • Managing rates on deposits in order to co
Slide 11: Deposit Type Trend
11 Deposit Type Trend 11 Deposits by Type Trend (in millions) $4,074 $4,544 $5,101 $6,111 $6,365 $6,427 Non Int Bearing Demand Interest Bearing Checking Money Market Savings Time Brokered Time 2018 2019 2020 2021 2022 2Q 2023 11% CAG R
Slide 12: Deposit Summary as of June 30, 2023
12 Deposit Summary as of June 30, 2023 12 Deposits by Channel (in millions) Commercial Deposits by NAICS Code (in millions) 8.1% 14.0% 5.2% 10.1% 1.3% 7.9% 1.3%4.4%4.6% 3.5% 4.2% 1.3% 3.0% 18.8% 9.4% 2.9% Finance & Insurance RE, Rental & Leasing Manufacturing Other Services Skilled/Memory Care Const
Slide 13: Uninsured Deposits
13 Uninsured Deposits 13 Average Deposit Balance per Account = $33,000 *Excludes $569 million and $645 million, respectively, of fully insured funds in Insured Cash Sweep (ICS) accounts Uninsured Deposits (in millions) June 30, 2023 March 31, 2023 Call Report Uninsured Estimate* $ 1,654 $ 1,793 Call
Slide 14: Investment Portfolio
14 Investment Portfolio As of June 30, 2023 14 Fair Value of Investments by Type 4.8% 8.3% 61.0% 7.5% 6.5% 2.6% 9.3% Treasuries US GSE & US Agency MBS - agency MBS - non agency State & Muni CLOs Corporate • All Investments are classified as Available for Sale • Average T/E Yield is 3.39% • Average D
Slide 15: Liquidity Overview
15 Liquidity Overview 15 Liquidity Sources (in millions) June 30, 2023 March 31, 2023 Cash and Cash Equivalents $ 160.7 $ 138.3 Unpledged Securities 343.5 310.3 FHLB Committed Liquidity 857.2 932.8 FRB Discount Window Availability 184.1 207.7 Total Estimated Liquidity $ 1,545.5 $ 1,589.1 Conditional
Slide 16: Net Interest Income/Margin
16 Net Interest Income/Margin 16 • Net interest income down slightly from prior quarter as higher average balance of interest-earning assets was offset by an increase in cost of interest-bearing liabilities • Net interest margin decreased 16 bps from prior quarter as the increase in cost of deposits
Slide 17: Wealth Management
17 Wealth Management 17 • Assets under administration up slightly in 2Q23 • 1Q23 increase in Wealth Management fees included seasonal tax preparation fees • Increase in AUA resulted in slight increase in Wealth Management revenue compared to the prior quarter excluding the seasonal tax preparation f
Slide 18: Noninterest Income
18 Noninterest Income 18 • Noninterest income increased $3.0 million from prior quarter primarily due to gains on the redemption of subordinated debt and sales of other real estate owned • 2Q23 noninterest income included $0.9 million loss on sale of investment securities as part of repositioning of
Slide 19: Noninterest Expense and Operating Efficiency
19 Noninterest Expense and Operating Efficiency 19 Noninterest Expense and Efficiency Ratio (1) (Noninterest expense in millions) $43.5 $44.5 $42.9 $41.3 $49.9 $0.3 $3.3 53.1% 54.3% 58.3% 57.6% 55.0% Total Noninterest Expense Adjustments to Noninterest Expense Efficiency Ratio 2Q 2022 3Q 2022 4Q 202
Slide 20: Asset Quality
20 Asset Quality 20 • Nonperforming loans increased $4.1 million primarily due to one commercial loan as well as increases in the equipment finance portfolio • Delinquencies in consumer portfolio remain low • Net charge-offs to average loans was 0.19% • Provision for credit losses on loans of $5.9 m
Slide 21: Changes in Allowance for Credit Losses
21 Changes in Allowance for Credit Losses 21 ($ in thousands) ▪ Changes to specific reserves ▪ New Loans ▪ Changes in Credit quality including risk rating ▪ Changes in portfolio mix ▪ Aging of existing portfolio ▪ Other charge-offs and recoveries ▪ Change to macro- economic variables and forecasts ▪
Slide 22: ACL by Portfolio
22 ACL by Portfolio 22 ($ in thousands) June 30, 2023 March 31, 2023 Portfolio Loans ACL % of Total Loans Loans ACL % of Total Loans Commercial $ 875,295 $ 5,180 0.59 % $ 823,847 $ 5,365 0.65 % Warehouse Lines 30,522 — — % 10,275 — — % Commercial Other 732,616 10,110 1.38 % 756,553 10,397 1.37 % Equ
Slide 23: Outlook
23 Outlook 23 • Prudent risk management will remain top priority while economic uncertainty remains • Continue generating strong financial performance while maintaining conservative approach to new loan production to build capital and liquidity • Planned reduction in the consumer portfolio will cont
Slide 24: Appendix
APPENDIX Midland [=] States Bancorp, ne.
Slide 25: Commercial Loans and Leases by Industry
2525 Industries as a percentage of Commercial, CRE and Equipment Finance Loans and Leases with outstanding balances of $4.92 billion as of 6/30/2023 ($s in millions) RE/Rental & Leasing $1,497.8 30.4% All Others $627.4 12.8% Skilled Nursing $485.0 9.9% Construction - General $345.2 7.0% Manufacturin
Slide 26: Commercial Real Estate Portfolio by Collateral Type
26 Commercial Real Estate Portfolio by Collateral Type 26 CRE Concentration (as of June 30, 2023) CRE as a % of Total Loans 38.4% CRE as a % of Total Risk-Based Capital (1) 262.7% Notes: (1) Represents non-owner occupied CRE loans only Collateral type as a percentage of the Commercial Real Estate an
Slide 27: Capital Ratios and Strategy
27 Capital Ratios and Strategy 27 • Capital initiatives increased CET1 to 8.03% from 7.77% at 12/31/22 with limited buybacks below TBV • Internal capital generated from strong profitability and slower balance sheet growth expected to raise TCE ratio to 7.00%-7.75% by the end of 2024 • Capital action
Slide 28: Reconciliations of Non-GAAP Financial Measures: Tangible Book Value Per Share
2828 MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Tangible Book Value Per Share For the Year Ended (dollars in thousands, except per share data) 2017 2018 2019 2020 2021 2022 Shareholders' Equity to Tangible Common Equity Total shareholders' equity—GAAP $ 4
Slide 29: Reconciliations of Non-GAAP Financial Measures: Adjusted Earnings (Annual)
2929 MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Adjusted Earnings Reconciliation For The Year Ended (dollars in thousands, except per share data) 2017 2018 2019 2020 2021 2022 Income before income taxes - GAAP $ 26,471 $ 50,805 $ 72,471 $ 32,014 $ 99,112
Slide 30: Reconciliations of Non-GAAP Financial Measures: Adjusted Earnings (Quarterly)
3030 MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) Adjusted Earnings Reconciliation For The Quarter Ended June 30, March 31, December 31, September 30, June 30, (dollars in thousands, except per share data) 2023 2023 2022 2022 2022 Income before income taxes
Slide 31: Reconciliations of Non-GAAP Financial Measures: Efficiency Ratio
3131 MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) Efficiency Ratio Reconciliation For the Quarter Ended June 30, March 31, December 31, September 30, June 30, 2023 2023 2022 2022 2022 (dollars in thousands) Noninterest expense - GAAP $ 42,894 $
Slide 32: Reconciliations of Non-GAAP Financial Measures: TCE to Tangible Assets
3232 MIDLAND STATES BANCORP, INC. RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES (unaudited) (continued) Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share As of June 30, March 31, December 31, September 30, June 30, (dollars in thousands, except per share data) 2023 2
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